KELOWNA, B.C. – Global fertilizer use was down significantly in 2008-09, but don’t expect a repeat performance from the world’s farmers.
Despite last year’s reduced consumption, fertilizer use has been increasing steadily during the past decade and the upward trend is likely to continue, says Canadian Fertilizer Institute president Roger Larson.
“Globally, we see 2008-09 as being off about five percent,” he said.
“This could be the biggest single-year drop in fertilizer consumption that we’ve seen in the world since probably 1980, maybe (the biggest ever).”
Read Also
Farmland ownership fires up Saskatchewan politicians
Saskatchewan politicians debate the enforcement of farmland ownership laws in the province.
Speaking to farm delegates at a recent Canadian Federation of Agriculture conference in Kelowna, Larson said a growing world population, the rising demand for food and lower than normal stocks-to-use ratios for many key crops suggest global fertilizer use will rebound.
He said increasing food consumption in India and China and expanding agricultural productivity in Eastern Europe bodes well for the fertilizer industry over the long term.
“Over the past 10 years, cereal production has barely kept up with utilization,” Larson said.
“I think that shows there has been a market demand for every bit of increased production over the past 10 years. There was a slight reduction in food consumption last year but nothing compared to other industries like steel and oil.”
Larson said world fertilizer prices have reacted to the drop in commodity prices during the past year, but markets are still in a state of flux.
Industry insiders are closely watching the 2009-10 U.S. corn stocks-to-use ratio, he added.
Although there is much debate surrounding the number, the U.S. Department of Agriculture suggests the ratio could be around nine percent, the lowest number in the past decade and well below the 20-year average of 15 percent.
U.S. wheat and corn prices are also down significantly from the unprecedented highs that were reached in the first half of 2008, Larson said.
Urea prices have followed suit, dropping from a high of $850 US per tonne (f.o.b. in the Persian Gulf) in 2008 to less than $300 earlier this year.
Questions surrounding world potash prices were also answered recently when Canpotex, the world’s largest potash exporter, settled a new supply contract with Indian buyers for $460 per tonne, cartage and freight included.
Last year, Asian buyers paid double that amount.
Larson said the coming year will be interesting for fertilizer manufacturers.
If global consumption rebounds, distribution networks could be tested.
The International Fertilizer Industry Association recently issued a report suggesting that although global fertilizer consumption is likely to rebound, world stocks of phosphate, potash and sulphur should be plentiful until 2013.
At the same time, North American farmers could face challenges securing crop nutrients heading into the 2010 spring planting season.
“The prospect of a strong recovery in fertilizer demand is seen as possible from 2010, as farmers worldwide who have been cutting fertilizer use in response to the global recession might expand (consumption) … in reaction to attractive crop prices and improving margins,” said the IFA report, which was released at the end of May.
“This could lead to a possible rush of fertilizer deliveries.”
